Mandatory mediation rules to shake up justice system by Kim Hawkey

DE REBUS: Please note original article is found at  at www.derebus.org.za

The Rules Board recently published a set of draft mediation rules that are set to have a significant impact on the legal system.

These rules provide that once a matter before court is opposed, the matter will be referred to mandatory mediation and parties who refuse to participate in the mediation may receive punitive costs orders.

The object of the rules is to provide an alternative dispute resolution (ADR) mechanism for parties to litigation to promote ‘expeditious and cost effective resolution of the dispute between them’.

The Cape Law Society, at its annual general meeting in November, hosted a workshop on the draft rules, which was led by a panel consisting of Daryl Burman, Graham Bellairs, Teresa Erasmus, Adam Pitman and Traci Lee Bannister, who are members of the society’s specialist committees.

In the session, which created much debate and discussion, those present were given an overview of the draft rules, as well as of the Law Society of South Africa’s (LSSA’s) comments on the rules that were submitted to the Rules Board.

Mr Pitman said it was expected that the draft rules would be finalised by the end of 2011, with a pilot project taking place in early 2012. ‘It is coming and our law will change. This will have a fundamental impact on the way we litigate,’ he said.

Mr Burman said that ADR had not ‘really taken off among those in the attorneys’ profession’. However, in the past couple of years there had been many pieces of legislation that demanded mediation and there was also the judgment in the Brownlee matter (MB v NB 2010 (3) SA 220 (GSJ)), where the court limited the costs the attorneys were entitled to due to their failure to send the matter to mediation at an early stage.

Then, two months ago, the Rules Board published the draft mandatory mediation rules. He said that the LSSA had a very short period to prepare a response to the draft rules and, in anticipation of an upcoming meeting with the Rules Board, the panel used the opportunity of the AGM to gain input from the profession on the proposals.

Mr Bellairs provided an overview of mediation in South Africa from a litigator’s point of view, as well as a summary of the draft rules as follows:

Procedure

In terms of the proposed procedure, as soon as an appearance to defend is entered in action proceedings or a notice of intention to oppose is delivered in application proceedings, the clerk or registrar of court must refer the dispute to a dispute resolution administrator to explain to the parties the purpose and aim of ADR and to facilitate mediation of the dispute between them, including setting the time period for completion of the process and explaining to the parties that if they do not participate in mediation there may be consequences such as punitive costs orders. The draft rules provide that if the parties refuse to participate in mediation, their refusal must be recorded in a memorandum and the matter will then be referred back to court, where the matter may proceed on an opposed basis. Should the court find, at the trial or hearing of the matter, that the refusal was unreasonable and that mediation may have resulted in substantially the same finding, the court may ‘make such order as to costs as it considers appropriate against the party or parties that refused mediation’.

In addition, the court can also refer matters for mediation at any time before the commencement of the trial or hearing of an opposed matter. The parties can also apply to court for such referral. In terms of proposed r 8, the mediator is simply a facilitator, who can make no finding of fact, credibility or law, and everything discussed during the mediation is on a without prejudice basis. If a settlement is reached, the mediator will forward the agreement to the administrator, who will refer it to court to be made an order. If no settlement is reached, the mediator will report this to the administrator, who will refer the matter back to court to proceed on an opposed basis.

Fees

Mediators’ fees are prescribed in terms of the draft rules, which indicate that the fees will be payable by the parties proportionate to the number of parties.

Legal representation

The draft rules provide that legal representatives cannot participate in, but may observe, mediation proceedings and may not ‘interfere with, delay or obstruct the continuity and conclusion of the proceedings’. The rules also provide that representatives of government parties to mediation must be authorised to conclude and sign settlement agreements.

Suspension of time limits

The time limits prescribed by the rules of court are suspended during the mediation process.

Mediators

The Justice Minister determines the qualifications and standards of fitness for mediators.

In its comments to the Rules Board, the LSSA said it viewed the move towards mediation as a ‘positive one if the consequences and aim thereof are to make justice more accessible’. Despite this, the LSSA said that there was a number of ‘unintended consequences that will result should the draft mediation rules, in their current form, not be suitably amended’. Mr Bellairs highlighted some of the areas that the LSSA considered problematic and some of those aspects that required clarity. These were:

  • Compulsory mediation should be replaced with discretionary mediation, with such discretion to be exercised by a judicial officer.
  • A person with sufficient expertise in legal matters, such as a judge or a magistrate, should be in control of the mediation process rather than an administrative functionary.
  • The Office of the Chief Justice, rather than the Justice Minister, should regulate the mediation process, in keeping with the principle of separation of powers. Mediators should be appointed by, and control of the mediation system should lie with, a judicial officer rather than the dispute resolution administrator, who would be a Justice Department employee.
  • Parties may not be willing to use the mediation route, especially because they may have to pay costs in a shorter period of time.
  • The LSSA was ‘gravely concerned’ that parties will be responsible for mediator’s fees, which will add a substantial cost to the ordinary litigation process. The costs of court-based mediation should therefore be covered by the state.
  • The fees for mediators require more information. The LSSA said that mediators should be paid a reasonable fee to ensure a satisfactory level of competence and suggested that fees be payable on a tariff basis.
  • The stage of referring a matter to mediation should be later, that is, not at the point when an application to oppose is filed as at that stage there has been no ventilation of the case and the extent of the issues has not yet been determined, meaning that the mediator may spend a lot of time ascertaining the nature of the dispute. The matter should therefore rather be referred to mediation after the close of proceedings in an action and after delivery of an answering affidavit in application proceedings.
  • Not all matters are suitable for mediation.
  • Lack of legal representation was problematic as this could result in an imbalance between the parties, which could influence the mediation process. However, it was recognised that the presence of legal representatives should not result in the delay or obstruction of the mediation proceedings.
  • Parties should have the option of appointing a private mediator at their own cost.
  • The accreditation and management of mediators must be stipulated more clearly.

Questions

Some of the questions raised in response to Mr Bellairs’ presentation included:

  • What happens in urgent matters? Mr Bellairs said that this was one of the reasons why the LSSA proposal included that a judicial officer should exercise the discretion whether to refer the matter to mediation.
  • Can parties refuse mediation and succeed in the case at court, yet still be denied costs? Mr Burman answered in the affirmative, saying that if the matter could have been settled at the mediation stage a punitive costs order may be made against a party or the parties.
  • Do the draft rules infringe on the constitutional right to have a justiciable dispute heard by a court of law? Mr Burman said that s 34 of the Constitution states: ‘Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.’ The section therefore provides for access to justice, not access to courts.
  • Other questions included how the indigent would afford to pay for mediation and how this impacted on access to justice, how additional costs, such as those of interpreters, would be covered, how legal aid would fit into the proposed regime change and how the proposed rules could be reconciled with existing court rules.

Comments

In addition, some of the comments and suggestions made by those present were:

  • It is wrong in principle that the parties are compelled to pay the costs of mediation as parties do not have to pay the costs of the judge when a matter is heard in court. This imposes a cost obligation on the parties that they did not previously have. Mediators should therefore be part of the court structure and should be funded in the same way as judges are funded. Mr Bellairs responded to this comment, saying that the LSSA recognised that the ‘costs’ issue flies in the face of the access to justice argument as a litigant is faced with added costs he would not have had to pay if he proceeded to court’.
  • Punitive costs orders are contrary to the spirit of mediation as they are essentially a threat of punishment.
  • Provisions included in a settlement agreement must be capable of enforcement. It is therefore necessary to have a competent mediator who can draw up such an agreement, as a court can refuse to make a settlement agreement an order of court.
  • The recordal of a settlement agreement indicates how important it is for legal representatives to be involved during mediation as they can ensure it is reduced to an enforceable agreement.
  • There are certain matters that mediators are better able to deal with and parties can reach a better agreement through mediation in certain matters. However, you cannot prescribe to the parties that mediation is compulsory.
  • The entire process is putting the cart before the horse as the type of proceedings appropriate for mediation and the correct stage for a matter to be referred to mediation first need to be determined. There are certain matters that will be inappropriate, if not impossible, to mediate, such as striking off applications, exceptions, provisional sentence summons and debt review matters.
  • The Rules Board is correct in providing that legal representatives’ participation in mediation should be controlled as some representatives could frustrate the role of mediation. In addition, the settlement agreement should come from the parties. A legal representative can, however, assist in the opening and closing statements.
  • There must be space for clients to go back to their lawyers for advice as the signing of settlement agreements is done ‘then and there’ and clients may do something that is not in their best interests.
  • Mediation should happen sooner rather than later in the proceedings as once pleadings are closed, the attitudes of the parties may harden and costs are incurred, and the mediator may ‘go into judicial mode’ and decide the matter based on the pleadings.
  • Referring the matter to mediation is likely to result in a delay in proceedings.
  • Training of attorneys to act as mediators is essential and as many attorneys as possible should be trained.
  • There must be a fair distribution of work to mediators.
  • There is also room for mediation in certain criminal matters. There are many cases that appear in the criminal justice system that are very close to civil cases, for example where someone is arrested and brought to court ‘over a money matter’ or a neighbor dispute. Some criminal matters are ripe for mediation. However, some criminal matters may never be resolved via mediation.

Ms Erasmus addressed those present on the benefits of mediation and on the ‘prison of fear’ that attorneys may experience as a result of court-based mediation.

She said that the benefits of mediation included settling matters early. This, she said, may seem contradictory to growing a legal practice, however the benefit of resolving matters by mediation is that the likelihood of repeat work from clients is increased. Ms Erasmus said that mediation had the potential to save legal costs and time, it was private and confidential, it may achieve a result that may not be competent for a court to reach and, importantly, it often preserved relationships.

  • In conclusion, one of the members present at the AGM summed up the response to the rules shared by many attorneys present as follows: This mediation is going to come. There are matters that clearly cannot go to mediation and the rules have not been properly thought through. We welcome mediation, but it must be done properly so that it operates efficiently and to the benefit of the public.’

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